If Sakmongkol were to be asked who is the greatest economist- he will answer in all sincerity, it is Tun Dr Mahathir.
In the years he was the PM, Tun Mahathir understood what economics is all about. His approach to economics, Sakmongkol likes to repeat as much as possible, is summed up in his rationale for opening up a bakery in Langkawi. Readers will know the bakery is called the loaf. If they have been to the loaf at the Pavilion Shopping Mall in Bukit Bintang, they will realise that it is always full.
When asked why was he willing to take the risks by opening up a high end bakery in langkwai- sakmongkol remembers the Tun saying- that you create the product first and develop the market after.
Sakmongkol finds this a very logical approach. The product must exists first and then you can educate the public to like it.
In other words the Tun has always been unconventional in his thinking.
This also reminds Sakmongkol of an economics story told to him by one professor. Two salesmen were sent to China to market shoes. The First salesman wired his HQ and said- no good here. there's no market as people here dont wear shoes.
The other salesman called back and excitedly told his bosses- Good News, there is a huge market here. 500 million are yet to wear shoes.
During the financial crises of 1998 and thereabouts, Tun Mahathir went against the market wisdom by doing the opposite of what the IMF wanted. He was responsible for pegging the Ringgit and forming the various Dana Modal and Dana Harta.
In
Tun Mahathir is also the one who has been talking consistently about using gold.
If during all these years we could use the US Dollar as a kind of standard, I don't see why we cannot use gold. Gold prices do fluctuate but the range is far less than with paper currency. Besides there will always be a demand for gold so that you will not lose too much if gold depreciates.
and just to illustrate the foresight of Tun Mahathir, Sakmongkol wishes to tell the story of what a couple in
Four years ago, fearful of a property crash, David and Maureen Somers sold their house and bought gold... Mr Somers and his wife Maureen claim it would be "vulgar" to say how much they invested in gold. However, he does say they sold their three-bedroom, detached house in
"Over thousands of years gold has never reached zero. The price is a risk, but at the end of the day I will still have the same amount of gold," he says.
"There are people who probably hold bank shares that would have been seen as conservative investments and you could question what they are going to be left with."
Two weeks ago, when Tun floated the idea of pegging the Ringgit, the finance minister cavalierly dismissed it.
"America is doing exactly the same now by putting up a USD700 billion rescue package. When Tun created this the last time, the world and IMF was skeptical about his approach. Malaysia was the earliest to recover from the economic maelstrom."
ReplyDeleteWhat SAKMONGKOL dose not understand is the US has the USD700 billion and does not need any help to do what it has to do.
Malaysia would have begged the IMF if it did not have the RM billions to save itself. South Korea begged the IMF and now is more prosperous than Malaysia.
If I may Sakmongkol,
ReplyDeletein response to the anon (23.51), the fact that Malaysia has the money to save itself WAS one of the factor it did not beg from the IMF. Why be indebted to the IMF when we could save ourselves? BUt being indebted to the IMF was Anwar's goal. That was why he implemented extreme measures to cripple the economy further. Which in the end will deplete the money reserves which should have been meant to rescue the economy.
Read this further please for some revelation - http://query.nytimes.com/gst/fullpage.html?res=9903EFD81230F933A25750C0A96E958260
And the US do not have USD700 billion. They will have to print new notes. We did not have that kind of luxury back then.
As for the notion that South Korea is more prosperous than Malaysia, I just have to disagree.
JMD-
The present Finance Minister just had to disagree in order to show that he has his own mind and is not subservient to the ex PM. Pretty soon he may have to flip flop like his predecessor always did or live to regret for his action (or no action)
ReplyDeleteRefer to anon (23.51)..
ReplyDeletewah wah wah... have USD700 and still we see the stumbling of wallstreet and the drastic depreciation of USD. as US is a major trader with us, that is why TDM suggestion is worth be considered. We don't want to be in a sinking boat with the US aren't we?
It was good la we have those billion RM to save us back then, showed how capable out economist team was kan? what's ur problem? wud u rather we beg for IMF... my my my... south korea is properous because they begged for IMF??... dang..we should put this in economy textbook.. cehh
I was just reading around in order to get my head around this topic. Here's what I found:
ReplyDelete* The US Fed is not a government agency like most central banks. It is a private entity. The shareholders are private banks. The US government only has oversight powers.
* The Fed lends money to the US government at an interest.
* The Fed creates money simply by writing a cheque.
The US hasn't got the 700 billion physically. It's the Fed writing the cheque!.
* In the UK, a bail-out is not a bailout. It's a partial nationalisation.
Finally here's a quote attributed to the late economist John Kenneth Galbraith:
"Never underestimate the power of stupid people in large groups".
Evidence of that already emerging in TV reports on the crisis in the US and Europe.
..Oh yes, Asia too...
ReplyDeletemahathir is very good at everything
ReplyDeleteeven kuli pun kena tipu beberapa kali
apa la baghal kuli ni. selamanya l ko kuli
najib
Anuar did not have the RM billions, Mahathir kept the money like it was his own. He pushed Anwar aside and show off what he can do with "his own" money.
ReplyDelete